Stock Market Fear and Panic Fractal

By: Anthony_Cherniawski

Late yesterday afternoon I wrote an email entitled “Panic Cycle Shift.” Make sure you read it if you haven’t yet done so.

Early in September I suggested that the market would have 43 “up days” followed by 43 “down days”. That is still correct. Remember that I am referring to calendar days. Now convert that to market days and the result is 30-31 trading days, depending on the placement of weekends and holidays.

Now it gets interesting. The 31 “market up” days from August 7 to September 19 were not continuous, but interrupted by an 8.6 “market down” interval between September 4 and September 19, leaving an estimated 21.5 more or less continuous days in the rally.

If you add up the number of days in this Cycle (258 hours divided by 7 hours in a day), you get 36.85 days. What gives? What is interesting about this cycle is that it may truly result in 30.7 “total market down” days, or 43 calendar days of actual decline. The 6.15 days of rally that we just saw are then added to the 30.7 to achieve the 36.85 total market days and 49.15 calendar days instead of the 43 days that I had originally proposed. This is what is so fascinating about Cycles. They “shift” in a dynamic way while still achieving their goals. In this case, we may end up with a devastating Wave C that will bring fear and panic to the market.

All of this starts today.

We may be getting a sense of this from the VIX, which has held support at the Intermediate-term level.

Traditionally the market may not react strongly at its top and, being Friday, the VIX may be subject to the usual “smack-down” at the end of the day. However, a “VIX long” or “SPX short” is where we need to be.

Regards,

Tony

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As a State Registered Investment Advisor, The Practical Investor (TPI) manages private client investment portfolios using a proprietary investment strategy created by Chief Investment Officer Tony Cherniawski. Throughout 2000-01, when many investors felt the pain of double digit market losses, TPI successfully navigated the choppy investment waters, creating a profit for our private investment clients. With a focus on preserving assets and capitalizing on opportunities, TPI clients benefited greatly from the TPI strategies, allowing them to stay on track with their life goals

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